To be strategic, a state needs to be able to define its long-term interests and then apply the means at its disposal to achieve the ends that further those interests. Is the term “strategic Europe” then a contradiction in terms? In creating the European Union—its institutions, the single market, euro currency and acquis of shared laws, regulations, and decision-making processes—a majority of European states have indeed acted strategically over the past fifty years. They have overcome the regional political imbalances that led to two world wars and are attempting to confront together the ever-changing external risks to their domestic security and prosperity, whether from the rise of new economic powers, financial instability, terrorism, or illegal migration. By diluting aspects of their domestic sovereignty, EU member states have been able to strengthen their economies and protect their societies in ways that would never have been possible if they had acted alone.

Where the EU and its member states have rarely acted strategically is in applying all of the means at their disposal to try to shape the world beyond the EU’s borders. The two important exceptions to this have been the EU’s enlargement to central Europe and EU trade policy. The former transformed the geopolitical map of Europe. The latter, although contradictory and focused on the short term at times, has contributed to market opening and wealth creation across the world.

European foreign and security policy making, however, remains a sovereign and inter-governmental exercise. The political and democratic reasons for this arrangement are self-evident. But the result is that the EU struggles to act or to be perceived as a strategic actor on the world stage. Instead, the EU remains principally a “civilian power”—using the leverage of access to or exclusion from its large domestic market, alongside a dominant position in economic standards-setting and regulatory design, to achieve economic advantage or to try to modify the behavior of other governments.

Responding to Domestic Vulnerabilities

Fifty years after the Treaty of Rome established the European Economic Community, EU member states still have the greatest potential to act strategically when they look inwards toward their shared domestic vulnerabilities. These vulnerabilities tend to take three forms. The first is economic and is a result of the steady fall in the relative competitiveness of many parts of Europe when compared to rising economic powers across Asia and, increasingly, Latin America. Stung into action by the fall-out from the global financial crisis, which exposed the extent of this loss of competitiveness for a large proportion of the EU, European governments and EU institutions are working around the clock to prevent the collapse of the eurozone and a fall into long-term economic stagnation. There is a growing risk that the speed with which governments and societies must react and the depth of reform necessary to address these challenges are driving EU member states apart rather than together. On the other hand, the recent negotiation of new processes for fiscal and macroeconomic coordination among EU members points to a continuing sense of common strategic purpose.

The second shared vulnerability emanates from the EU‘s “neighborhood,” including Eastern Europe, Russia, the Caucasus, the Middle East, and North Africa. This neighborhood can act as a conduit for a range of domestic risks to EU member governments and societies, such as illegal immigration, organized crime, terrorist attacks, and energy insecurity. EU member states have responded to these common domestic vulnerabilities, improving levels of cooperation on internal security, policing, and justice over the past ten years, as well as the current effort to build a more interconnected and resilient European energy infrastructure.

The third shared domestic vulnerability is to major global trends, such as international financial instability or the effects of climate change. EU members have jointly negotiated common EU policies on financial and climate-related risks. New EU authorities to oversee European banks, securities, insurance and pensions, along with the European Systemic Risk Board, are designed to reduce the EU financial system’s vulnerabilities to external shocks. And in the area of climate change, the EU is moving forward with ambitious plans to reduce emissions of greenhouse gases by 20 percent, increase the renewable proportion of the energy mix by 20 percent, and cut energy consumption by 20 percent, all by 2020. Although these goals were adopted in part to set an international example, they are also designed to lessen the EU’s exposure to rising fossil fuel costs and enable European companies to be at the cutting edge of renewable energy technologies and industries.

The EU’s Broader Strategic Ambitions

To be considered a strategic actor, however, the EU cannot simply react internally to the problems beyond its borders. It should also use the means at its disposal to try to shape its external environment. Here the EU’s record is far more mixed. The fact is that different EU member states have different geographic priorities when it comes to their foreign policy—central European states are more focused on Eastern Europe and Russia; Spain, France, and Italy more on North Africa and the Middle East; Greece on the Balkans and Turkey, the UK on Afghanistan and Pakistan, and so on. EU member states also encompass different histories and cultures when it comes to undertaking military action abroad and in the types of defense expenditures that their societies will support. EU member states tend, therefore, to prioritize different external risks and opportunities and, as a result, choose to retain an inter-governmental and sovereign approach to their foreign and security policies. And proposals for military specialization among EU member states or for the purchase of common weapons systems, which would maximize the impact of the EU’s significant collective military force, have made little headway.

Consequently, the EU’s external achievements have tended to be tactical rather than strategic. The EU has dispatched small civilian crisis management operations to Chad, the Democratic Republic of Congo, Kosovo, and Aceh among other countries and regions in recent years to deal with a range of crises. The EU is also involved alongside NATO and others in tackling piracy off the coast of Somalia.

But the EU has not been the coherent and decisive actor one might have hoped for in the face of the major strategic challenges of the past ten to twenty years. It has taken a back-seat on the Arab-Israeli conflict; it was unable to craft policies to help North African states take a gradual rather than revolutionary path to reform; it remains divided in its policy towards Russia; it has failed so far to lead the emergence of an international agenda on climate change; and its much vaunted “strategic partnerships” with China and other emerging powers have tended to operate more as talking shops than instigators of change, either in the bilateral relationships or in the countries concerned.

The new procedures for foreign policy coordination contained in the Lisbon Treaty may make the EU’s tactical presence more effective, not least through the creation of more integrated EU embassies around the world combining the EU’s economic clout and some of its members’ national diplomatic skills and leverage. But the treaty is still not designed to enable strategic action unless all member states sign up unequivocally to a common objective.

Remaining a Civilian Power

So what path might the EU take towards being a more strategic actor? For the immediate future, the number one priority of the EU and its member states must be to extricate themselves from their current state of economic crisis. It is futile to conjure the image of a ‘strategic Europe’ until Europe regains a level of collective economic stability and dynamism relative to its main peers on the world stage.

While this may appear to be a tall order, the fact is that the EU’s economic destiny still lies in its own hands. Despite facing structural problems including aging societies, shrinking workforces, the inability to integrate effectively the immigrants that it will require over the coming years, and entrenched but increasingly burdensome social welfare systems, the EU also has attributes that could cement its position alongside the United States, China, and possibly India as one of the poles of the global economy during this century. Even today, according to the World Economic Forum, five of the top ten of the world’s most competitive economies are EU member states (Sweden, Germany, Finland, the Netherlands, and Denmark). These rankings reflect the EU’s general—if not universal—strengths: European technology, design, brands, and business management; relative resource sufficiency when compared to the world’s other existing or rising powers, especially for food and water; and resilient and open political systems with strong institutional balances in the judiciary, media, and civil society.

If EU member states can stabilize their economies and achieve a period of sustained growth, they will be in a position to use the magnetic force of the EU’s enormous domestic market—500 million of the world’s wealthiest savers and consumers—to try to engineer change in the world beyond Europe’s borders. The EU and EU member states retain pivotal positions and experienced diplomats in all of the world’s most important international economic and political institutions. They have the opportunity, therefore, to leverage their market power to help write the rules of global governance in an increasingly interdependent world, and draft new laws and standards for the transnational challenges, such as climate change, energy security, and financial regulation, that pose so many risks to the EU internally. EU members will still remain quick to use sanctions as a key tool of their external policy, even if the likely effects of such measures are uncertain at best—Syria being the latest example. But a more intelligent and strategic use of access to the single market might also enable the EU to project growth and stability into its neighborhood, especially North Africa and the Middle East, and even beyond into some of the world’s most fragile countries and regions that could be the sources of threats to European security in the future.

As far as one can see, therefore, a strategic Europe still needs to hone its skills at being a civilian power first and foremost. But in an interdependent world where economic clout will likely offer important forms of external influence, the EU retains the potential to be one of the decisive powers on the world stage in the twenty-first century.

Robin Niblett is the director of Chatham House.

To reinvigorate debate over European foreign policy and Europe’s role in the world, Carnegie Europe is publishing a series of essays from leading policymakers, diplomats, experts, and journalists on Strategic Europe over the coming weeks. A new essay will appear every day.